SNB says that they are not in the mood to rule out plummeting rates. The chairman of Swiss National Bank (SNB), Thomas Jordan recently discussed the Swiss franc and the ongoing downbeat interest rates and domestic risks. The bank even said that the ending of original policy measures is far from reality currently, even after the signaling of U.S. Federal Reserve that it will soon start leveling back its asset buying program.
The exit still seems far away and how to communicate the same has not been unveiled. Meanwhile, the SNB chose to retain its exchange rate cap on the Swiss franc of 1.20 euro recently. Introduced in September 2011, cap after a safe inflow, led the Swiss franc to advance sharply, causing a threat to health of exporters here.
The least exchange rate is still completely imperative for Switzerland. Only this can help in the inflow of sufficient fiscal condition in this country. Regardless of the cap, cash flow will continue into Swiss economy. The ongoing uncertainty in monetary markets and the fact that franc here is a refuge; it still seems that inflow will occur here. However, analysts quarrel that the classy hedges against overcast scenario could be discarded.
It does not really make sense that the $500 billion inflow will stay for the Swiss franc stipulating the financial circumstances that lie ahead. The short positions for the currency had limited dive and the currency continues to trade near to the SNB exchange rate floor.
Some even say that the negative rate of interest might turn into a means to enhance the economy. Also, any measures or ways that can help in maintaining the optimal financial conditions in Switzerland are not excluded anyhow. Similar is for the negative rate of interest that is present and cannot be just thrown out of the system.
The biggest threat to the economy in Switzerland is the volatility and economic shortcomings in the euro zone. The number of risks can push the franc to more pressure and the same exists even in the domestic market, which entails the credit market, real estate market and the mortgage market.